* For an explanation of the different approaches used by the AFL-CIO and the U.S. Securities and Exchange Commission to calculate total compensation, click here.

How the Top Brass Stays Healthy: Free Executive Physicals

Employees of Wal-Mart Stores Inc., the world’s largest retailer, have a strong incentive to stay healthy. An internal memo prepared for the Bentonville, Ark.-based company’s 2006 retreat of the board of directors noted that employees spent nearly twice the national average of their income on health care for themselves and their families, and only 48 percent were enrolled in Wal-Mart’s health care plan for its employees. That compared with 68 percent for most national employers.[1] In addition, 46 percent of Wal-Mart employees’ children were either on Medicaid or uninsured.[2]

Meanwhile, Wal-Mart’s top executives receive an annual “senior executive physical” examination paid for by the company.[3] Because they’re a small fraction of total compensation for senior executives, the company does not disclose the cost of these executive physical exams. Instead, they are noted with other perquisites in the category called "All Other Compensation." The annual physical exam and other perquisites that Wal-Mart’s president and chief executive officer Lee Scott received cost the company some $431,446 in the 2008 fiscal year ended Jan. 31, 2008. Scott retired as president and CEO in early 2009.[4]

Executive physical exams, which typically cost a few thousand dollars, consist of just a small fraction of the CEO’s total compensation. But it's notable that Wal-Mart provides them to executives as a perquisite, given the company’s poor track record of providing health insurance to its employees.

Described as the “Rolls Royce of physicals,” annual physical examinations for executives involve a battery of tests administered by a team of physicians.[5] Costing thousands of dollars, executive physicals are not covered by health insurance.[6] They offer high-quality medical care with speed and convenience to busy executives with on-site laboratories to provide same-day medical test results.[7]

Executive physicals are offered in luxurious and business friendly environments.[8] For example, at the Good Samaritan Hospital in Los Angeles, executive physicals are conducted in VIP-only areas where refreshments are offered in the waiting room and patients receive complimentary fuzzy bathrobes and slippers.[9] Other executive physicals are offered at such elite medical institutions as the Mayo Clinic as well as at boutique clinics such as the five-star Greenbrier resort.[10]

Executive physicals are controversial in the medical community. “With its outrageous cost and unproven efficacy, the executive physical is almost a parody of the high-cost, low-return procedures that prudent companies rightly want clinicians to eliminate for other employees," according to Brian Rank, a physician writing in the New England Journal of Medicine.[11] "But perhaps the most lamentable idea perpetuated by the executive physical is the implication that some patients—namely, those who have the ability to pay out of pocket or with company resources—are more worthy of effective, respectful, and personalized treatment than others.”

Although only top executives are eligible for company-provided executive physicals, Wal-Mart has considered less expensive ways to keep its wage workers healthy and productive. The internal memo revealed that the giant retailer considered an initiative to “dissuade unhealthy people from coming to work at Wal-Mart” by redesigning all jobs to require physical activity such as requiring cashiers to gather shopping carts.[12]